As a new year brings new leadership at the Ewing Marion Kauffman Foundation, the long-rumored internal struggle over whether the focus of the nation's largest and most influential resource for entrepreneurs should be far flung or local may soon play out.

Thomas A. McDonnell, longtime Kauffman Foundation board member and chair since 2006, assumed the role of president and CEO as of January 1, filling the position left vacant since exactly a year ago when Carl Schramm was forced out. McDonnell hasn't indicated yet whether or not he will guide a change of focus.

But given the pre-eminent role the Kansas City-based foundation has played in fostering entrepreneurism, the issue of whether Kauffman's focus should be more local than broad-based could have implications for angel-investor groups and entrepreneurs in every region of the country.

However, there are some longtime entrepreneur supporters and investors who suggest that the emergence of other foundationsinvesting in entrepreneurial activity and of serial entrepreneurs now actively impacting entrepreneurship mean Kauffman could refocus without negative impact.

Despite the substantial amount of time since the departure of Schramm, the architect of Kauffman's dramatically expanded presence in entrepreneurial activity, there's been little national visibility or blogger discussions about the struggle over Kauffman direction or of the real story of Schramm's departure. Nor has there been a lot of discussion about what might lie ahead for the $1.8 billion foundation.

During his 10 years as president, Schramm turned the foundation's focus dramatically toward national focus, then a global presence, becoming the largest and most influential resource available to foster technology innovation through entrepreneurial startups.

Schramm was asked to leave, though the official announcement was that he had decided to resign to return to academia. Both his departure, and the sudden availability of McDonnell for the top role, may yet provide fodder for discussion.

McDonnell's sudden decision in September to retire at 2012 year-end as CEO of publicly traded DST Systems, and the fact that the company's board virtually that same day put a new CEO in place, could provide a new batch of rumors surrounding Kauffman leadership.

One Kauffman change that's certain to occur is its involvement with venture-capital and private-equity investing, given its own dramatic report last spring that spelled out the sad experience the foundation has had in its 20 years of such investments. The in-depth report, titled "We have met the enemy...and he is us," amounted to an analytical revisitation what it describes as its "large (almost $250 million) and (largely) underperforming VC portfolio" and a promise to make dramatic changes in such investing.

Because of the clout Kauffman has with academia, the angel-investment community and others with financial roles in start-up companies and entrepreneurism, there's a perhaps not illogical reluctance on the part of many in the industry to speak out about the Foundation's apparent internal struggle.

But the fact Schramm's departure was the outgrowth of the conflict over Kauffman direction is pointed up by a couple of comments in e-mails to me for this piece.

As a friend close to Schramm said in an e-mail, "it was always a fight between Carl's vision of becoming a global leader in entrepreneurship and being a mainstay in Kansas City."

Added an angel-investment leader who declined to have his name tied to the comment: "I can tell you that the divergence on direction is based on the interpretation of the donor's (Mr. Kauffman's) intent. After all, it was his money. Far be it for us to determine what is the best use of his money."

"I do believe Carl went too far afield and walked away from the original donor intent, including spending vast sums of money outside the U.S.," said retired Kansas City business leader Ritchie Slaughter said in a telephone interview.

Slaughter had worked for Kauffman, the owner of the Kansas City Royals major league baseball team who created the foundation in the mid-1960s, before his death in 1993. Slaughter left the board in 2003, a year after Schramm's arrival.

"He was very willing to have people come here (to Kansas City) from around the world but did not want to spend money outside the United States," Slaughter said. "It is Mr. Kauffman's money and needs be spent the way he wanted."

"The new guy is likely to have community pressure to give more focus to and have more board members from Kansas City, but he's been chairman of the board for six years so I'd be surprised if he's backing away from national involvement," Slaughter said. "Kauffman specifically wanted a national footprint in entrepreneurship and a local footprint in youth development."

Among those who suggest a Kauffman refocus would likely not be detrimental to entrepreneurial activity at this point is San Diego angel-investor Michael Elconin, a long-time leader in the five-county Southern California Tech Coast Angels.

"Kaufmann was instrumental, to say the least, in the formation and growth of the Angel Capital Association (ACA), enabling the dissemination of best practices, and promoting efforts to bridge the gap between university research and startups," said Elconin, past chair of the San Diego TCA chapter. "I would say that in all three of these areas, the institutions and momentum Kaufmann created will, to Kaufmann's credit, allow them to continue without further Kaufmann support."

Janis Machala, one of the founders of the Seattle women's angel-investor group Seraph Capital and now dean of continuing education at Bellevue College north campus, agreed.

"Kauffman has done so much and was working in entrepreneurship when no one was focusing on that area," she said.

"Now there are many foundations investing in entrepreneurship and many successful serial entrepreneurs now actively impacting the fabric of entrepreneurship and all this activity and money means that Kauffman can refocus to their roots and not lose all that was done," Machala added.

Susan Preston, also a founder of the Seraph angel group who then became a Kauffman Entrepreneur-in-Residence and most recently has guided California's CalCEF Clean Energy Angel Fund, isn't quite as certain.

"We will feel an impact on programs if the Foundation focuses solely on Kansas City," Preston said. "But I have faith and belief that new leadership will recognize Kauffman's instrumental role in advancing entrepreneurship on a national basis, where the programs created and grants made in a number of areas, including for women eptrepreneurs, have helped change the landscape for the good."

A year ago Congress had to be talked out of doubling the amount of wealth required for individuals to invest in start-up companies. Now the lawmakers are considering the idea of removing basically all qualifications so that crowds of small investors might provide capital for entrepreneurial ventures.

What has stirred support among lawmakers and others for using the Internet and social media for crowd-fund investing is the challenge faced by many start-up companies to find funding in this struggling economy and the promise of the jobs such companies could create.

It was angel-investor groups who convinced Congress of the potential disaster for start-up companies in a provision that, for a time, was included in the so-called Dodd-Frank bill passed last year. The provision would have doubled the assets required for an investor to be "qualified."

It wasn't that difficult to make the obvious case to lawmakers to kill that section before a vote on the Dodd-Frank bill, since most lawmakers hadn't even been aware it was in the bill.

Now angel-group leaders are raising an alarm about the implications of the crowd-funding idea. But they may face a greater challenge because of the arguments of supporters, which include not just key lawmakers but the Obama Administration as well.

The proposal, which has already had a hearing in the House, is to allow exemption from SEC registration requirements for those trying to raise up to $5 million. As with a similar effort to tone down requirements for small public companies, the goal is to find new job-creation engines.

A high-visibility proponent of crowd-fund investing is an evangelical entrepreneur named Sherwood Neise of Miami, who told a Congressional subcommittee a couple of weeks ago that crowd funding could bring in as much as $500 million and lead to creation of 1.5 million new jobs over the next five years.

"What we are proposing is a jobs initiative that everyone should like since small businesses and entrepreneurs are the long-term engines of our economy," Neise said. "However, they need capital to grow and that has dried up since the 2008 financial meltdown."

Comments like that resonate with many, including the Obama Administration.

But not everyone likes his plan, specifically leaders of angel-investor groups, a number of whom I traded e-mails with to seek their thoughts. Angels have traditionally been the sources of capital for entrepreneur and start-up companies that need funding beyond what's called the "friends and family" initial source of money.

Bill Payne, viewed by many as the dean of angel investors, says "I find Neise's claims laughable," offering statistics that could cause pause if they reach the same ears as those who heard Neise's pitch.

Payne noted that Kauffman Foundation statistics suggest that about $100 billion from all sources, angels and VCs and friends and family, flows into start-up companies and they create 3 million new jobs a year.

"That computes to $33,333 per job," Payne said. "Now along comes Mr. Neise claiming that his idea would create jobs for $333 each. Are you kidding me?"

Payne, who has been an angel investor in a number of startups in the Northwest and elsewhere, added: "It's very simple from where I sit: I am not in favor of any investment vehicle that allows unaccredited investors to fund startup companies. It is very high risk and the invested dollars are totally illiquid."

Tom Simpson, who guided one of the Northwest's most successful venture-capital firms and now oversees a couple of angel-investor groups in Spokane, said it's important for "faster, cheaper and easier processes to attract investors to both young private and public companies."

But he said "any new regulations or processes to reduce the time and cost of raising money still need to provide prospective investors with sufficient product, market and management information, comprehensive financial data and specific risk factors to make an educated, informed investment decision."

Villette Nolon, chair of the Seattle-based women-angel group Seraphs and founder of the internet-based business Homesavvi.com, says that "while the intent of this idea is good, the outcomes would be disastrous."

"Legitimate businesses who would try this route would be extremely disappointed in the result, as truly sophisticated investors are highly unlikely to fund companies sight unseen, even at low amounts," she said. "That leaves only speculators who would be attracted by the idea of making a quick buck, and who could get very, very burned."

Gary Ritner, founder and heads the Seattle-based Puget Sound Venture Club, says the $10,000 proposed as maximum investment by a crowd-source investor "is too small" and the $5 million proposed maximum for the entrepreneurial startup "is too large, and not necessary."

But he added "we have to get capital flowing and, in concept, I like the idea of crowd funding."

Perhaps the major concern shared by angel investors and others is that a backlash could occur down the road if Congress hears of abuses and horror stories and decides crowd funding was a bad idea and things need to be made tighter to protect investors.

The concern is summed up by one who noted that "when the pendulum swings back, lawmakers always have it swing too far."

The mounting pressure on Congress and the Obama Administration to find some job-creating ideas to jumpstart the ailing economy is stirring growing interest in a couple of Congressional proposals that would lessen investor protections for the sake of allowing businesses more growth opportunities.

One proposal, already filed as a House bill by Rep. Ben Quayle, R-AZ, with the intent of accelerating the growth of younger companies, would suspend for most newly public companies what many view as a costly and troublesome provision of the Sarbanes-Oxley Act.

Quayle's proposal would allow a much greater number of public companies to opt out of Sarbanes Oxley Section 404, which requires public companies to disclose the scope and adequacy of their internal-controls structure. The measure would raise the current $75 million market-value threshold for reporting to $1 billion.

The other proposal would help entrepreneurial and start-up companies, many currently hamstrung in their ability to attract growth capital, to reach large numbers of investors for limited amounts of money via the internet in what's being called crowd-fund investing.

The proposals have come to center stage only in the last couple of weeks. And each has attracted growing support from those who contend the measures are vital to the goal of job creation. And each is also starting to stir opposition from those who question the idea of setting aside shareholder and investor protections.

Each proposal merits an in-depth look and thus in this first of two columns we'll examine the discussions surrounding Quayle's bill, the support being gathered for it and the comments of those expressing concerns.

Next week's column will focus on the crowd-funding proposal, including a look at those backing it and the concern it is stirring from many angel-investor leaders, particularly those up and down the West Coast.

Quayle's bill would allow public companies with market valuations below $1 billion to opt out of Sarbanes-Oxley Section 404 for the first 10 years after going public. The original Sarbanes-Oxley Act was amended in last year's Dodd-Frank Wall Street Protection and Consumer Protection Act to create the under-$75 million exemption.

Quayle and supporters of his measure, including the entrepreneur-focused Kauffman Foundation, contend that the costs for complying with the requirements of this section of Sarbanes-Oxley can exceed $1 million for new companies and can cost them up to $20 million in loss of valuation.

Quayle's measure is close to a plan outlined by the Kauffman Foundation a few months ago as "a set of non-partisan ideas to jump-start the ailing U.S. economy and increase job creation by accelerating the growth of startups and young businesses."

Kauffman, the nation's largest non-profit foundation focused on entrepreneurs, noted that the role high-growth startups play is vital to assure U.S. economic strength.

"Virtually all of the growth in U.S. jobs has been driven by the formation of firms less than five years old, and these new firms have been disproportionately responsible for commercializing the cutting-edge innovations that characterize modern life," the Foundation said.

"I believe this bill is an important step as we try to increase the number of companies that go public in the United States," said Robert Litan, Kauffman's vice president for research and policy. "The ability to raise capital in public markets will be essential as new companies create the jobs required to put Americans back to work."

One of the most pervasively visible proponents of both lowering the regulatory barriers for newly public companies and the proposal for crowd-fund investing is a Miami, FL, entrepreneur named Sherwood Neise, who has testified before Congress about both. He was co-founder of a company called Flavorx, which added flavors to medicine, that went public and was later sold.

In 2006, he was among those decrying what he called the "unintended consequences of Sarbanes-Oxley on small businesses," saying that meeting 404's requirements "ate up 14 percent of our net income."

But among those urging caution is former SEC Chief Accountant Lynn E. Turner, who said in an e-mail that contained the subject line "Short Memories:" "Clearly people have forgotten the hundreds of billions in dollars of losses investors suffered during the corporate financial reporting frauds, and the tens of thousands of jobs lost."

Neil McReynolds, a corporate-governance consultant in Seattle, said that while the original Sarbanes-Oxley requirements created some real cost and regulatory problems for smaller public companies, the changes brought about by the Dodd-Frank bill corrected some of those.

McReynolds, who has been a member of a number of boards of private companies and consulted with boards of public companies, said that while extending the exemption to $75 million cap companies, as Dodd-Frank did, made sense, "extending the exemption to $1 billion companies may be a bit of a stretch." He added that "there's still value in disclosure and internal controls."

Sharon Philpott, managing partner of national accounting firm BDO's Seattle practice, agreed, saying her firm supports the positions of the CFA Institute, Center for Quality Audit and the Council of Institutional Investors, who have all urged caution against further exemptions from Sarbanes-Oxley.

In the end, success or failure of expanding the exemption for internal controls may hinge on whether the pressure for jobs trumps the pressure to protect shareholders and investors.